Data helps consumers with small and large decisions. Purchasing and selling real estate is no exception.
From the time you start your search for a real estate agent to finally making the offer, data resources are plentiful, and finding the right nugget of information might just help you make a decision that saves you money and affects your overall happiness with your home.
Here are some ways you can use data to improve your home buying or selling experience:
Finding your agent
When finding your agent, there are many data points to help determine who is the best fit for you and your transaction.
Experience is a key component. The number of deals agents have closed will show their experience level, which can be crucial in their counsel and negotiation skills. Ask how many deals the agent has closed in the past 12 months. Market conditions change month to month, so an agent with up-to-date experience will be a more valuable adviser and partner in your transaction.
If you are interviewing agents to help sell your home, ask to see their list-price-to-sale-price percentage, price-drop history and the average days on market for their past 10 activated listings. Don’t be afraid to ask whether those homes closed, withdrew or expired. This information is not always available for non-agents to access, so ask the agent to print out a report from their multiple-listing service (MLS) and to provide it to you when you meet. Be wary of anyone who is hesitant to share this information.
Finally, seek out customer reviews. But be aware that on some sites, agents can influence which reviews are posted, cherry-picking the best reviews and hiding any negative ones. Ask the agent for their three most recent closed clients and ask whether you can reach out to see how their experience was. It never hurts to go to your state’s real estate licensing board site to see whether the agent has ever had a complaint filed against him or her or been involved in a disciplinary action.
Searching for your home
When starting the home search, most people have a general idea of where they want to live, but a lot of factors are involved in evaluating a location. Investigating local schools, neighborhoods, commutes and amenities can be especially daunting if you’re not familiar with the area. Numerous websites and apps provide rich amounts of data to help home buyers learn about an area and make better decisions.
Certain federal and state fair-housing regulations prevent agents from giving their opinion on specific details related to a particular neighborhood — such as crime and demographics — or school quality. Often, agents will refer their clients to websites that provide statistics and information to further investigate.
If you are concerned about crime, neighborhoodscout.com is a popular website that provides comprehensive statistics on crime and safety. Compiling data from various law enforcement agencies and using more than 20 formulas, it advertises a high accuracy crime rate.
A popular school review site, greatschools.org rates schools based on test scores and provides parent feedback and reviews. If you want to get more granular, Great Schools provides grade-level statistics on various subjects.
If you are interested in seeing walkability or transit and bike accessibility, walkscore.com is just what you’re looking for. The website provides a Walk Score for every address, indicating how walkable, pedestrian-friendly and convenient the location is by measuring proximity to restaurants, parks and other points of interest.
Negotiating the price
So you found your agent, your neighborhood and your dream house. How much do you offer? Is it a buyer’s or seller’s market? Are we paying too much? There isn’t always a right or wrong answer, but data can help you make an informed and confident decision.
Zillow’s Zestimate and the Redfin Estimate are two popular algorithms that provide an estimate of a home’s value by factoring in market data and information about recently sold properties that are similar to the subject property. These valuations are quick and helpful, but nothing compares to the expertise of a local agent who has seen the home and knows the market. When you are serious about making an offer, always ask your agent to run a comprehensive comparative market analysis to give you a firmer sense of the value of the property.
The Case-Shiller Home Price Index, developed by three economists, is a well-known resource that tracks home prices and sales over time across the country. The index provides insight about the direction of the real estate market.
Redfin’s Data Center is a great source to access price, sales and inventory data direct from the local multiple-listing service. You can become your own mad data scientist and filter data by region, property type and time period to view and download local statistics over a select period. Days on the market, inventory and months of supply are just a few of the many data points you can view to help you determine local market conditions. Here, you’ll also find Redfin’s Housing Demand Index that uses Redfin data to forecast buyer demand and competition.
Although there are vast data resources to help you determine how much you should pay for your new home, please remember this very important message. A home is only worth what someone is willing to pay for it. Algorithms will not tell you the effect that the coveted cul-de-sac location or the dated pink kitchen will have on the value of the home.
Use data, but trust your intuition, too. Google the address, drive around the neighborhood or even peek at your potential neighbor’s back yard. The more information you have, the better you’ll feel in your decision.
Marshall Park is a real estate broker at Redfin in Virginia who writes an occasional column on the local real estate market.